Lululemon profit jumps, to shut Japan stores

Wed Apr 2, 2008 12:49pm EDT
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By Susan Taylor

OTTAWA (Reuters) - Yoga wear retailer Lululemon Athletica LLL.TO LULU.O reported an unexpectedly big jump in fourth-quarter profit on Wednesday as it opened more stores and net revenue doubled.

Lululemon also said it would halt operations in Japan, where it has four stores through a joint venture, because they have consumed "a disproportionate amount of management time" while adding less than 1.5 percent to sales.

The Canadian company, which on Wednesday named insider Christine Day as its next chief executive, shrugged off economic jitters and said it will focus this year on North American expansion and developing online sales.

Lululemon said its profit rose to $14.6 million, or 21 cents a share, in the quarter to February 3, from $887,000, or 1 cent a share, in the year-before period. Excluding a one-time legal expense, it earned 5 cents a share in the year-earlier quarter.

Analysts expected earnings before exceptional items of 19 cents a share, on average, and revenue of $93.2 million.

Revenue doubled to $105.1 million. The company opened 10 new stores and said strong demand resulted in higher freight charges at Christmas as it worked to keep stores stocked.

Sales at stores open at least a year increased by 41 percent. Adjusted to exclude the impact of the strong Canadian dollar, they rose 24 percent.

For the year, Lululemon expects to earn 70 to 72 cents a share, with a 2 cent per share charge for the closures in Japan. Analysts had expected earnings of 72 cents a share.   Continued...